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Dulami said the agreement was not annulled adding "we are still in negotiations."

Ali Mussawi, the Iraqi prime minister's spokesman, earlier announced the agreement was terminated and later, when asked about the Dulami's claim the deal was still being discussed, Mussawi repeated, "The deal was completely canceled."

Hakim al-Zamali, a member of the Iraqi parliament's Security and Defense Committee, earlier said Prime Minister Nuri al-Maliki had formed a new committee to negotiate with Russia for buying more sophisticated arms than the ones in the canceled deal.

Mussawi told AFP the prime minister "had some suspicions of corruption, so he decided to review the whole deal...there is an investigation going on."

Russian President Vladimir Putin recently reshuffled several top generals amid an investigation into alleged fraud at the Defense Ministry, after replacing Defense Minister Anatoly Serdyukov.

Serdyukov was fired on November 6 amid a criminal fraud investigation into the sell-off of property at the Defense Ministry-controlled company, Oboronservis.

Investigators say fraudulent deals caused the state about $95 million in damages.

Russia announced in early October it had agreed to sell to Iraq $4.2 billion worth of weaponry, making it the second-biggest arms supplier to Iraq after the United States.

The sale was to include fighter jets, helicopters, and air-defense systems.